If retirement is on the horizon within the next five years, it’s time to embark on a critical self-assessment. Considerations such as eligibility for an immediate FERS annuity, continuation of FEHB coverage, and financial preparedness for retirement must be thoroughly evaluated well in advance to avoid last-minute surprises.
Navigating FERS Annuity Requirements
To qualify for an unreduced immediate FERS annuity, certain age and years-of-service criteria must be met:
- Attainment of your Minimum Retirement Age (MRA), in accordance with your birth year, with at least 30 years of service.
- Reaching age 60 with a minimum of 20 years of service.
- Reaching age 62 with at least 5 years of service.
It’s crucial to note that creditable service comprises any federal pay subject to deductions for the FERS annuity, excluding accrued sick leave or annual leave.
The FEHB 5-Year Eligibility Rule
Preserving Federal Employees Health Benefits (FEHB) coverage post-retirement hinges on meeting specific prerequisites:
- Retirement on an immediate annuity commencing no later than one month following your final separation.
- Continuous enrollment (or coverage as a family member) in any FEHB plan for the five years immediately preceding retirement, or for the entire duration since the first opportunity to enroll. Periods under TRICARE coverage can count, provided FEHB coverage is maintained upon retirement. The 5-Year Rule may be waived in case of acceptance of an early retirement offer.
Evaluating Retirement Income
Prior to retirement, it’s imperative to ascertain whether your projected retirement income will suffice five years down the line. Begin by estimating your net FERS annuity post-deductions, including tax withholding, FEHB premiums, and FEGLI premiums.
Subsequently, access your “my Social Security account” online to determine your Social Security benefit based on birth date and earnings record. Additionally, factor in the monthly TSP distribution, tailored to your preferences.
Prior to retirement, it’s crucial to make sure your projected retirement income will be enough five years from now. Start by estimating your net FERS annuity after deductions like tax withholding, FEHB premiums, and FEGLI premiums.
Then, access your “my Social Security account” online to find out your Social Security benefit based on your birth date and earnings record. Make sure to consider your monthly TSP distribution as well.
Finally, compare your monthly living expenses with your net income. If you find a gap between your income and expenses, it’s important to connect with an FRC® trained advisor for assistance in finding solutions before it’s too late.
